The U.S. Chamber of Commerce is lobbying Congress to amend the Foreign Corrupt Practices Act to lessen the financial burden on U.S. companies doing business in foreign countries. That burden has cost U.S. companies upwards of a trillion dollars and has made our nation less competitive in the world marketplace. Unfortunately, the most important amendment suggested by the Chamber is likely to make the problem worse. There is a better and simpler solution.

The FCPA is our nation’s effort to prevent companies from bribing government officials to secure business in a foreign country. Companies found guilty of paying bribes, or of failing to accurately describe the bribes in their financial records, have had to pay billions of dollars in fines and have faced the possibility of debarment from government contracts. Why so much money? Under U.S. law, companies are responsible for the acts of their employees even if management is unaware of the employee’s conduct. A typical scenario involves a company executive hiring a foreign consultant to help negotiate a contract with a particular ministry for the sale of a product or service. Unknown to management, the consultant’s fee includes a bribe to a foreign official.

Although intended to level the playing field, the FCPA has actually made it harder for U.S. companies to compete in the marketplace. Money that a company could have used to hire employees, build plants and market its products has been diverted to efforts to show that any illegal conduct was the act of a rogue employee.

If the bribe is uncovered, the company has no defense to criminal liability. Even though the bribe was not authorized by management, no one in management was aware of the bribe and the bribe was specifically against company policy, the company is criminally responsible. The only thing the company can do is try to convince the government not to charge it with a crime.

How does a company do this? Primarily by showing the U.S. Department of Justice that the company had a compliance program designed to prevent such conduct. Companies must evaluate their business environment to identify areas where unlawful conduct might occur. Such an evaluation must include an examination of the business culture of the foreign nation and even a boots-on-the-ground investigation of the company’s foreign partners or intermediaries. Companies must promulgate policies that detail permitted and prohibited practices, and employees must receive regular training on permitted practices and the penalty for noncompliance.

via Reform the Foreign Corrupt Practices Act.